Lost Labor

In today’s WaPo, E.J. Dionne bemoans labor’s lost story and takes the American left to task for accepting “a certain amount of creative destruction because, in Margaret Thatcher's famous phrase, there is no alternative,” and failing to counter conservatives’ labor story with a single, compelling narrative of their own.

[I]t will come as no shock that progressives can't quite agree on a single narrative. The left is united in talking about rising health care costs and the fact that most of our foreign competitors have government-run health insurance systems that take the burden of health care off employers. The iconic number: providing health care for workers and retirees accounts for $1,500 in the cost of each American-made car.

Critics of globalization tell an additional story of how free trade is sending many of our best-paying blue-collar jobs offshore. There is also the decline of union membership, a chicken-and-egg tale, since private-sector unions historically were strongest in the older manufacturing industries such as steel and cars. The UAW's numbers tell the story: 1,619,000 members in 1970, 1,446,000 in 1980, 952,000 in 1990, 623,000 in 2004…

[T]his muddle reflects a default on parts of the left and, especially, within the Democratic Party. Because so many Democrats fear that they might sound like -- God forbid! -- socialists, they are unwilling to challenge the right's core story…

For 60 years New Dealers and social democrats, liberals and progressives…insisted that few would embrace capitalism's innovations if the system's tendency toward creative destruction was not balanced by public innovations to spread the bounty and protect millions from being injured by change.

Meanwhile, at MSN, Jim Jubak explains why it isn’t globalization that’s killing American companies, but “their own inability to drive innovation and growth.” I was particularly interested in this passage:

The other advantage of all this focus on globalization and the sacrifices that U.S. workers have to make is that it takes attention away from how these "struggling" companies are investing their money. While it's trying to close plants in the United States, GM Daewoo Auto, the South Korean subsidiary of General Motors, is spending $150 million on a new design center and $100 million on a technical center near Seoul to develop new diesel engines critical for GM's sales growth in Europe…

The implication is that globalization may force down the wages of "unskilled" U.S. workers, but skilled U.S. workers in manufacturing -- such as those who might be employed in a design center except, whoops, it was built in Asia -- don't have to worry. Nor, the argument goes, do service workers in the United States. Their jobs can't be shipped overseas.

Except, of course, that they can.

Between these two stories, there emerges the urgency of the left finding its singular voice on labor issues and reject the notion of creative destruction. American workers, the economy, and the environment all depend on it.

I’ve heard just as many Democrats as Republicans balk at the suggestion that the government must step in and, for example, require automakers to develop alternative energy-run vehicles by a drop-dead date, and the response is always that it would put an undue burden on the corporations. But here we have automakers reinvesting hundreds of millions of dollars in diesel in an effort to seize a bigger share of the European market while closing plants and laying off workers in America. (An idea, I might add, that seems unconscionably stupid with Toyota Priuses flying off the lots and gas prices even higher in Europe.)

Mr. Shakes notes: “They have no imagination, it seems. I wonder how much more of this cost cutting craze the American economy can take. For a few years now the cost cutting has been piling up cash on the ledger books and the captains of industry seem content just to sit on it. Don’t they have any ideas about how to spend this money? Other than distributing it as stock dividends and bonuses, of course.”

And he’s absolutely right. American corporations are raking in record-high profits (remember the oil industry’s $10 billion profit in a single quarter?), while the American people are carrying record-high debt—a dangerous imbalance which cannot be indefinitely sustained and which the market will not fix. In reality, this was the inevitable result of ever laxer market regulation and the complete obliteration of corporate responsibility. Creative destruction indeed.

The market doesn’t solve problems that it creates. That’s the government’s responsibility, which we seem to have forgotten. Until we’re ready to re-embrace a philosophy of public innovation to spread the bounty and protect millions from being injured by change, we’re on a crash course with an unavoidably ugly end.